TED Case Studies

Shark Case

1. The Issue

Since 1986 demand for shark products has greatly increased as the result of a number of
factors. As tuna and swordfish supplies fell, fishermen turned increasingly to sharks. For
example, in Florida the shark catch doubled between 1986 and 1987. Shark meat soon became
popular and increasing demand drove up prices. During the 400 million years sharks have
inhabited the world's oceans they have evolved into apex predators -- they are at the top of the
food chain among marine life -- but are not able to withstand predation by humans. Because of
demand for shark meat and for fins used in shark's fin soup, shark have come under heavy
pressure from harvesters in North American waters. Therefore, the U.S. National Marine
Fisheries Service has instituted quotas on shark taking in the U.S. Exclusive Economic Zone
(EEZ).

2. Description

Many sharks are now being killed. The meat of the shark itself, which can be expensive,
is not the part of the animal with the greatest economic value. Half of the shark's value is in the
fins which are largely sent to Asia to make shark-fin soup. The fins have noodle-like
cartilaginous tissues used by Chinese chefs to thicken and flavor soup. Long strands are prized
and unusually large fins can be worth more than the average $10 per pound.(1) Demand for
shark's fins have risen dramatically in the People's Republic of China (PRC).
Liberalization in the PRC which lifted restrictions against eating shark-fin soup, combined with
increasing wealth, have fueled the increasing demand for sharks.(2) Hong Kong alone consumes
an estimated 3 million kilograms of shark in a year.(3) Sharks preferred for shark-fin soup are
sandbar, bull, hammerhead, blacktip, porbeagle, mako, thresher, and blue; only the lower caudal
lobe from mako and thresher is considered acceptable.

Since shark meat has
remained relatively low priced,
fishermen are often interested in the fins only -- leading to the practice of live-finning, which is
removing the fins from the shark while the shark is alive and returning the shark to the water.
While some sharks may be able to swim in shallow water without fins, they sink to the bottom in
deeper water. It is estimated that worldwide 100-200 million sharks per year die in the
fishing/finning process, earning $240 million per year for suppliers. It is feared that some
species are already near extinction. While the National Marine Fishery Service (NMFS)
admits that no one truly knows how many sharks are out there, estimates from test sample areas
and mathematical models suggest that the following species are already near extinction: mako,
elephant fish, lemon sharks, hammerheads and great whites.

Increased fishing of sharks
is of particular concern in light of their slow rate of reproduction. Shark reproductive strategy
produces few adults. It takes most sharks 12 to 15 years to reach sexual maturity. Gestation
periods can be as long as 22 months. The result is that once the shark population is depleted it
takes decades to replace itself. In addition to their culinary appeal, sharks have both medical and
ecological benefits. For example, shark corneas are transplanted into human eyes, shark cartilage
is used to create artificial skin for burn victims, and shark-liver oil is used in hemorrhoidal
medications.

In addition, sharks rarely develop cancer and research on sharks might
lead to a better understanding of the disease. Shark cartilige, thought to cure cancer, has led to a
boom in poruidct sales. One Costa Rican company reports a seven-fold increased in production
of shark products such as this.
Sharks help balance out the ecology in oceans. Without sharks, some prey -- for example,
stingrays favored by hammerheads -- would boom. In Australia, ecologists believe that
increased shark fishing may have caused the spiny lobster industry in some areas to collapse since
small octopi, whose numbers are no longer kept down by sharks, prey on the lobsters.(4) Sharks
also serve to remove the sick, diseased, weak or injured animals from the ocean.

Last
year the United States outlawed live finning and published plans to protect 39 species of shark.
Federal officials have worked for 3 years on a fisheries management plan for Atlantic and Gulf
waters to protect the shark population. The plan, called the Fishery Management Plan (FMP)
comes from the National Marine Fisheries Service (NMFS). Its aim is to reduce the commercial
and recreational fishing through licensing requirements and quotas. The plan also bans the
practice of stripping the fins from sharks and dumping the sharks back into the ocean. There have
been reports that in shallower waters the sharks have attacked swimmers on occasion, as they
drifted towards shores and beaches.

In addition to the efforts of the United States international cooperation will be necessary.
A conference on shark conservation was held in 1992 in Sydney during which delegates agreed
to recommend a ban on finning and establish quotas and fishery management plans.(5) Australia
has recently banned trade in
great white parts and restricted fishing for several other shark species. In addition, South Africa
recently declared the great white shark a protected species and imposed a ban on fishing them
and selling their jaws and other parts.

When the NMFS first produced a draft of its fisheries management plan in 1989 the
fishing industry was outraged, complaining that the NMFS had in the mid-1980s encouraged
fishermen to enter the business of shark fishing particularly by conducting seminars, calling
sharks an "underutilized
resource" and even giving them names of Chinese people who dealt in fins.(6) Since then, there
has been a realization that stocks are becoming endangered and some management is required.

Since many species of sharks migrate beyond U.S. waters and are fished by other nations,
for example Cuba and Mexico, cooperation with these nations will be necessary to establish a
comprehensive plan for shark protection. Cooperation with Mexico can proceed under existing
agreements such as the MEXUS- Gulf agreement and the International Convention for the

6. Forum and Scope: USA and UNILATeral

There are three parts to the shark protection regulations. (1) Quotas: The large
coastal and pelagic species (those living in the open sea) each have semi-annual quotas (January
1-June 30, July 1-December 30). Once the quota for that time period is reached, the commercial
fishery for that species group is closed. The annual quota for the large coastal
species group (this is the group targeted by the FMP) for 1993 has been set at 2,436 million tons
by dressed weight. The quota for pelagic species which are primarily taken as by-catch in tuna
and swordfish fisheries has been set at 580 million tons. Currently there are no restrictions on
commercial
fishing of the small coastal species. The recreational "bag limit" aims to keep landings of large
coastal sharks below 464 metric tons (mt) and of pelagic sharks below 980 mt. Therefore, the
bag limit is 4 sharks per boat per trip for large and pelagic species combined. The limit is 5
sharks per person for small coastal shark species. (2) Licensing: All fishermen who catch
and sell shark meat or fins from the U.S. EEZ are required to purchase an annual federal permit.
The recipient of the permit must agree to abide by federal shark fishing regulations whether in
state, federal or international waters. The recipient of the permit must also earn over 50 percent
earned income from commercial fishing, or from charter vessel or headboat operations or have
at least $20,000 in gross receipts from selling fish.

(3) Ban on finning:

The practice of live finning is banned and the landing of fins and carcasses must be at a
weight ratio (fins to carcasses) equal to or less than 5 percent. Regulation of shark fishing in the
U.S. Exclusive Economic Zone (EEZ) occurs at the federal government level. Several nations
have a Governing International Fishery Agreement (GIFA) with the United States but none of the
GIFAs involve sharks; sharks are a prohibited species and foreign vessels cannot fish them with
the EEZ. Mexico, the Bahamas, Canada, and Cuba also have economic/conservation zones
which exclude foreign fishermen. Australia and South Africa have each recently imposed bans
on fishing of great white sharks and have restricted fishing of other shark species.(8)

Proposed rules from the NMFS in February, 1997 would tighten the regulations on
shark taking, in light of the dorp of shark poluations of as much as 80 percent in some parts of
the Atlantic. For most species, taking swould be reduced by 50 pcerent and for five species
harvesting would be completely banned.(10) 7. Decision Breadth: 3 (USA, China,
Taiwan)
The measure of course will affect the United States, along with the chief consuming nations,
China, Hong Kong and Taiwan.

7. Decision Breadth

8. Legal Standing:

LAW

The Magnuson Fishery Conservation and Management Act, in Section 304(c), gives the
Secretary of Commerce authority to prepare and implement a fishery management plan for any
fishery which requires management, including migratory species such as oceanic sharks (see
SALMON case).

C. GEOGRAPHIC Clusters

9. Geographic Locations

a. Geographic Domain : North America [NAMER]

b. Geographic Site : CARIBbean

c. Geographic Impact : USA

Shark fishing has become focused on North America because it contains one of the
world's last great reserves of sharks, mostly because Americans have never had a tradition of
shark eating. "With the Arabian Sean and Nigerian and Mexican waters all but fished out,
suppliers are turning to the U.S. market just for the fins, which can bring more than $20 a pound
for shark-fin soup."(11)

10. Sub-National Factors: NO

In all, 18 countries border the Atlantic Ocean and the Gulf of Mexico and Puerto Rico
and the U.S. Virgin Islands border the Caribbean. Each has its own management authority over
fishing of sharks in state/provincial waters. Florida, North Carolina, Texas and Virginia are the
only states among this group which have specific regulations concerning shark fishing in state
waters. States will be encouraged by the NMFS to comply with Fishery Management Plan
regulations.

11. Type of Habitat: OCEAN

D. TRADE Clusters

12. Type of Measure: Regulatory Standard [REGSTD]

13. Direct vs. Indirect Impacts: INDirect

The measure does not ban the trade of shark, but puts limits on the taking of shark for any
purpose.

The economic significance of shark fishing quotas is that sharks have traditionally been
looked upon as an underutilized resource. Fishermen with the encouragement of the NMFS
turned to shark fishing when swordfish and scallops became too expensive. Shark meat in the
United States was a low-priced alternative. The NMFS estimates cost/benefits of the FMP as
follows: process of developing, implementing and maintaining the FMP for the government
sector totaled $1,704,600 and for the private sector $154,302. The annual effect on the U.S.
economy by the FMP is not likely to equal $100 million. The Shark FMP is not expected to
cause a major increase in costs or prices for consumers, individual industries, or local
government agencies. The FMP is not expected to adversely affect competition, employment,
investment or productivity (see Table 1).(12)

Source:
Fishery Management Plan For Sharks of the Atlantic Ocean. Prepared by National Marine
Fisheries Service, National Oceanic and Atmospheric Administration of the U.S. Department. of
Commerce, February 25, 1993. (Published April 26, 1993.) 17. Impact of Measure on
Trade Competitiveness: MEDIUM The regulations on shark fishing are not in the form of
export/import bans, etc. The extent to which they affect trade will be determined by the extent to
which supply is reduced. Some in the U.S. shark fishery industry argue that it is impossible to
regulate the migration of sharks and that since Mexico's shark fishery is double the size of the
U.S. stock, the Fishery Management Plan policies will only penalize the U.S. shark fishery. The
NMFS estimates that the Shark FMP will not interfere with U.S. shark fisheries' ability to
compete with foreign fisheries in domestic or export markets.

18. Industry Sector: FOOD

19. Exporter and Importer: USA and CHINA

Information on international shark trade is limited, but it is estimated that world trade of
shark products equals $240 million.(13) True numbers are unknown because markets operate
with the secrecy of black markets and in addition the U.S. Commerce Department lumps sharks
in with all species of fish in trade statistics.(14) The leading exporters include Hong Kong,
Japan, China, Mexico, and the United States, the latter importing $6 million in 1990. The
leading regional importer of dried shark is east Asia ($133 million in 1989). The leading
country importers were Hong Kong ($5.8 million in 1989), the EEC ($75-127 million in 1989)
and the United States ($5.8 million 1990). Perhaps some of the U.S. imports were consumed by
Americans of Asian heritage.

Thirty-four additional species will be monitored for data collection only; these are
generally small, deep water sharks caught in swordfish and tuna long line fishing. 22.
Impact and Effect: MEDium and PRODuct
The shark is the apex predator of the world's oceans. If the shark population is decimated the
marine food chain will have to adjust: sting rays and octopi will grow in numbers and their prey
will decrease in number (as noted, octopi feed on lobster). 23. Urgency and Lifetime:
MEDium and 20-60 years

No one knows for sure the numbers of sharks in the world's oceans. Sampling indicates
the following species may already be near extinction: mako, elephant fish, lemon, hammerhead,
great white. Shark lifetimes depend on the species. For example, the life spans of the species
deemed by the NMFS as the 2 most important species differ by 40 years; the estimated life span
of the blacktip shark is 21 years while that of the sandbar is 60 years.

24. Substitutes: LIKE

Other fish or differing types of sharks may be substitutes for the shark now being caught.
Shark farming might be a
possible alternative, but it could be a dangerous business. Sharks were valued earlier in the
century because they are a good source of vitamin-A. However, scientists have since then found
a way to synthesize vitamin-A. Sharks are still sought for their meat which was a cheaper
alternative to other fishes, their leathery skin and their fins. Fins make up the majority of
international shark trade.

VI. OTHER Factors

25. Culture: YES

Chinese have been using shark fins for soup since the Han Dynasty over 2,200 year
ago.(15) It will be difficult to
change their cultural practices and their beliefs in the
special curative properties in shark's fin soup (see also SWIFT case). Many, however, argue
that shark is an expensive source of protein with few medicinal properties. The shark's
reputation as a man eater, particularly since the "Jaws" movies has made shark fishing a popular
sport, also contributes to its decline.

26. Trans-Border: YES

This case has involved cooperation between the United States and Mexico in the
Caribbean.

27. Rights: YES

The practice of finning has been criticized as unnecessarily cruel to sharks, leading to sure
death.

Fishery Management Plan For Sharks of the Atlantic Ocean. Washington, DC: Prepared by
the National Marine
Fisheries Service, National Oceanic and Atmospheric
Administration of the U.S. Department of Commerce,
April 26, 1993.

(7) Fishery Management Plan For Sharks of the Atlantic Ocean, Prepared by the National
Marine Fisheries Service, National Oceanic and Atmospheric Administration of the U.S.
Department of Commerce, published April 26, 1993.